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Loans & Mortgage advice

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  • 19-01-2012 10:31pm
    #1
    paulam
    Registered Users Posts: 16 ✭


    Hi

    Can anyone offer me some advice please? Myself and my partner are thinking of looking into the possibility of getting a mortgage in the next year or so.

    At the minute we are trying to get our finances in some sort of order. As yet we have no savings but are planning to start soon.

    My partner has recently just cleared an existing credit union loan and has a small bit of credit card debt.

    Myself on the other hand I have quite a bit of debt. Credit union loan, bank loan and credit cards. I know this is unwise and foolish.

    What i was going to look in to doing was topping up my credit union loan to pay off the bank loan and credit cards and over the coming months pay off as much as possible from the credit union loan to get it down.

    My question is that if we did apply for a mortgage, would the mortgage company want to know the reason for the credit union loan and would this go against me?

    Any advice greatly appreciated.

    thanks


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    #2
    unclebill98
    Registered Users Posts: 3,816 ✭✭✭unclebill98


    They would ask what it was for.

    Generally they would seek an up to date statement. An ICB search will show up credit balances and old completed loans so there is no point in hiding the fact if asked about it.

    After all you will have spent time getting your finances on track, so that will stand to you.


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    #3
    badgerbroc11
    Registered Users Posts: 141 ✭✭badgerbroc11


    Youre repayment ability is calculated based on total debt repayments eg if you have a credit union loan with 300pm and the mortgage repayment will be 900pm, giving total debt repayments of 1200. if youre take home pay is 2400 per month, then youre debt to income is 50%. A tule of thumb is that any thing approaching 40% is to high.

    If you cleared the cu loan first, then youre debt/income would be 900/2400 or 37.5%. At 37.5%, even though this is within the rule of thumb area it would probably be too high given current conditions. For youre own sake aim for a debt/income of less than 30%.

    Best advice would be to clear all other debt first. If this is not possible, make sure that youre cu loan repayments are as low as possible so it will not impact hugely on the debt/income calculation.


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